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KRG to cut public sector employees’ salaries, benefits: cabinet decision

21 percent cut to all earning more than 300,000 IQD
2020-06-21

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SULAIMANI — Pressed by a massive budget shortfall, the Kurdistan Regional Government’s (KRG) Council of Ministers announced late on Sunday (June 21) that it has decided to make a one-time cut to the take-home pay of all public sector workers earning more than 300,000 Iraqi dinars ($251) per month.

In its statement, the cabinet said that it would be paying out “79 percent of salary expenditures and financial benefits of employees,” meaning that there would be a 21 percent cut. Many public sector employees receive both a base salary along with benefits and stipends for things like transportation.

The families of martyrs and Anfal victims, former political prisoners, people with disabilities, and those employees whose financial benefits total 300,000 Iraqi dinars or less are spared any cuts under the new order.

At the top, senior officials, including those drawing pensions after retiring from high-ranking posts, will see their pay cut by half.

However, the Council stressed that the order was a temporary mechanism that only applies to the next salary distribution.

The KRG is under a tremendous amount of financial pressure after its two main sources of revenue – budget transfers from Baghdad and independent oil sales – largely evaporated over a period of several weeks this spring.

In late April, the federal government ran out of patience with the KRG’s refusal to abide by the terms of the 2019 Federal Budget Law, which mandated that Erbil send 250,000 barrels of crude oil per day to Baghdad for export, and stopped all transfers, except for a one-time 400 billion Iraqi dinar infusion to grease negotiations designed to reach a comprehensive agreement.

At the same time, global oil prices dropped precipitously because of oversupply in the market and depressed demand due to the coronavirus pandemic.

As the Kurdistan Region’s most important employer, failure by the government to pay salaries this month would have sent shockwaves through the economy. The cuts, however, will likely inflame public discontent.

(NRT Digital Media)